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ROGRAM GROUPS
By Rusty Bishop, CEO, Federated Auto Parts
An important trend like Americans holding onto their vehicles longer has an impact on our membership and, with strategic planning, the impact can be a very positive one.
What product categories are benefitting most from Americans holding onto their vehicles longer? Consumers have been keeping their cars longer. That trend has resulted in an increase in vehicle maintenance, which helps move products like filters and wiper blades, but it also has created more demand for replacement parts. Over the past few years, we have seen growth in replacement parts as a percentage of total aftermarket spend and this is due directly to an older vehicle parc and the soft economy. Product categories like brakes, shocks and struts, axles, bearings, timing parts, etc. all benefit from the extended mileage of vehicles kept longer by car owners. And, with this focus on replacement parts, we are seeing growth in the professional service sector and a decline in do-it-yourself repairs. At Federated, we follow industry trends closely and share them with our members throughout the year in an effort to better understand and anticipate changes in the marketplace. We look at market changes, product lines, brand equity, inventory mix, coverage, features and more, on a regular basis in order to determine how to best approach the evolving market. From there, we develop strategies to assist our members in growing sales, increasing profits and improving asset management. An important trend like Americans holding onto their vehicles longer has an impact on our membership and, with strategic planning, the impact can be a very positive one. How important is data/data warehousing to your operations? Data warehousing is one of the more important aspects of inventory management that Federated has developed in recent years. Increased data analysis allows our members to do a better job analyzing customers, suppliers and product categories in order to determine areas of opportunity and improvement. By sharing information at the aggregate level between all members, we can do a better job as a group, finding ways to improve our businesses in such areas as pricing, inventory assort-
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June 2013 | Counterman
ment, trend analysis and warranty. We have only begun to realize the power of data and are developing new tools frequently to help deploy it more effectively. We are working more closely with our suppliers, improving efficiencies in many areas and developing value through collaboration. Going forward, I expect the continued growth in data utilization to be a key component of Federated members’ success. What type of alternative products are you seeing coming into the mix different from maintaining cars and light trucks? For example, batteries or battery chargers for powersports, ATVs, boats, etc? We are always looking to support Federated members with new products and new markets whenever possible, and this often means adding a niche line to complement a product offering. The Federated Co-Man warehouse is extremely effective at creating complete categories by partnering with multiple suppliers focused on doing what they do best. The Co-Man operation also allows us to consider emerging categories and make them available to members before market demand is mature. With some of the new technology and diagnostic-driven products, we are seeing once-emerging product categories mature and grow, allowing for new categories to come to the forefront. We are working closely with suppliers to develop more coverage for specialized markets like marine, farm and fleet, industrial and so on, and we support Opticat’s efforts to expand catalog listings in many of these areas. What issues keep you up at night? We worry about the amount of inventory that exists in the distribution network today and the effect that terms factoring has on our industry. Certainly new technology and how it will impact our business is always a concern. We know that vehicle manufacturers want a bigger share of the service market and are trying to “lock out” the aftermarket. That’s why we are so apContinued on pg. 56